President Obama to Ask Department of Labor to Issue Tougher Rules Regarding Overtime Pay for Salaried Employees

DOLBY:  TIMOTHY C. HAUGHEE

MARCH 14, 2014

The Obama Administration announced this week that it will ask the U.S. Department of Labor (“DOL”) to issue rules that increase the minimum salary that must be paid to exempt employees.  Currently, certain salaried employees, including shift supervisors, store managers, and certain types of office workers, are exempt from the overtime pay requirements of the Fair Labor Standards Act based on their job duties, provided that they are paid on a salary basis of no less than $455 a week.  If those employees earn less than $455 a week, then they are non-exempt and must be paid one and one-half (1 ½) times their regular rate of pay for all hours worked in excess of forty (40) hours a week.

Accordingly to the Obama Administration, the $455 a week salary threshold for the overtime exemption may result in some exempt employees working upwards of 50 or 60 hours per week, yet still receiving only $455 a week ($23,660 annually), which is below the federal poverty level for a family of four.

The last time the minimum salary for exempt employees was raised was in 2004 when President George W. Bush raised the threshold from $250 a week to $455 a week.  The Obama Administration has yet to indicate the amount to which it desires to raise the minimum salary for exempt employees.  Instead, the Administration has asked the DOL to “begin the process” to determine what the new standard should be and then to propose a new rule to implement the new standard.

We will provide an update as this matter develops.

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